Archive for the 'The State of the Real Estate' Category

There’s a whiff of optimism in the air concerning the home building industry. Can it possibly be?

First, the Oracle of Omaha, aka Warren Buffet, says, “A housing recovery will probably begin within a year or so. In any event, it is certain to occur at some point. […] These businesses entered the recession strong and will exit it stronger. At Berkshire, our time horizon is forever.” You gotta love that last sentence. And to back up the talk, he is putting hundreds of millions of dollars into his housing related businesses (Shaw, Johns Manville, etc.) which is why they will exit the recession stronger. See WSJ article.

Per the ARC website “The Atlanta Regional Commission (ARC) has launched an ambitious initiative, called “Fifty Forward: Metro Atlanta Futures Forum,” to explore possible future scenarios for metro Atlanta and forge an action plan to ensure future livability, prosperity and sustainability. Fifty Forward is a two-year visioning initiative based on open-house style forums centered around critical topics that are now and will continue to impact metro Atlanta for decades. The forums will feature nationally recognized keynote speakers and will explore possible actions and ideas to ensure livability, prosperity and sustainability.” See www.atlantafiftyforward.com. This morning they hosted one such meeting where Maureen McAvey of the Urban Land Institute (ULI, www.uli.org) briefly presented the findings of it’s The City in 2050. Since the event was free and they had a continental breakfast, I decided to go.

It was both exciting and depressing. For those of us interested in the built environment, how cities grow, how real estate is developed, and how people live, it was a chance to hear from the experts. The good news for the industry is that demand for all sorts of housing will be considerable over the next 41 years. The bad news right now is that the market and the means of financing are in a shambles. Add to that our crumbling infrastructure, the inability of governments to think more than 12 minutes into the future (see post below about the water situation), and shrinking tax revenues, the near term is scary.

The term in the ULI book that caught my eye was “Full Spectrum Housing” Here’s how they defined it:

Successful housing will mean a diversity of options. Thriving communities will provide a full spectrum of prices and types — catering to shifting demographic preferences. Buyers and renters will balance lifestyle choices with market options: retirees will downsize up the street; a family with children will move without changing schools; and employees will find homes near their jobs.

One of the ideas expressed by more than one of the “experts” was that perhaps the holy grail of housing, the mortgage interest deduction, may have to be phased out. The question they ask is whether or not the policy of our government should be to encourage (subsidize) home ownership over renting. The concept of the deduction seemed to be serving us well since WWII, but maybe now we have a new reality. Maybe owning a home should not be the way a family acquires wealth. Maybe home ownership causes people to stay put when they should not, like when their job moves across town or across the country. Is that a good thing? Maybe. Maybe not. But either way, it’s going to get some discussion and perhaps revision before 2050. Maybe before 2020.

The next 41 years are going to be exciting — like it or not. They won’t be much like the last 50. Change will accelerate. Critical issues and the need for decisions will be coming at us at a breakneck pace. We need to have thought far enough ahead to make good decisions when the time comes, so I encourage all of you to jump into the fray and participate. I hope we can agree on enough to try new ideas quickly and not get bogged down in protecting turf, finger pointing, and yesterday’s thinking.

I’d love to hear some of your ideas about what our future cities — Atlanta in particular — are going to look like. Post a comment or send me an email. Thanks.